Financial Markets: Stability

Debate between Baroness Penn and Lord Bilimoria

Thursday 3rd November 2022 Lords Chamber

[Baroness Penn (Con)]

The noble Baroness is right that there is more than one regulator at play in this space. That point was also made by the noble Lord, Lord Davies of Brixton. If the noble Baroness will forgive me, I will come on to some actions taken after the 2018 stress test shortly.

The noble Lord, Lord Tunnicliffe, asked what the forthcoming Bill will do to promote financial stability. Allowing us to tailor our financial services regulation to the UK’s situation and needs will mean that we can create the best regulation for our circumstances. In a world where financial services are evolving all the time, with new developments and technologies requiring regular changes, the measures in the Bill will mean that UK regulations can remain up to date and effective.

It is also the role of the Government to ensure that their own decisions lead to trust and confidence in our national finances. Our responsible approach to managing the economy meant that we went into Covid and the current economic crisis with strong public finances, allowing us to intervene to support people’s lives and livelihoods. In that context it is important to acknowledge that, while well intended, the recent growth plan had unintended consequences for economic volatility.

Mistakes were made, and we have taken steps to fix them. Most of the tax measures in the growth plan have been reversed and the associated volatility dissipated. However, we are still faced with a profound economic crisis, with global inflationary pressures driven by increased demand post Covid, elevated energy prices after Putin’s invasion, widespread labour shortages and, in response, central banks across many major economies raising interest rates.

My right honourable friend the Chancellor of the Exchequer has been clear that we will take the measures needed to restore confidence and trust in the UK’s public finances and to deal effectively with the economic shocks that are being felt across the globe. In doing so there will be difficult decisions to take, but I hope that I can reassure the noble Lord, Lord Tunnicliffe, and others, that in taking them, this Government will protect the needs of the most vulnerable.

Specifically on recent events, the FPC noted in its July Financial Stability Report that the worsening global economic outlook had caused markets to be volatile in recent months. Since July, global inflationary pressures have intensified further. Specifically on the intervention by the Bank of England, all noble Lords will be aware that in late September there was elevated uncertainty in the UK bond market that resulted in gilt yields rising rapidly and significantly. LDI funds, many of which held leveraged positions in the gilt market, faced significant margin calls as a result. In some cases, these calls exceeded the cash buffers that they held, forcing them to raise cash by selling gilts into a falling market. Large sales of gilts into an already illiquid market led to yields increasing even further, in turn triggering further margin calls and forcing further gilt sales to try to maintain solvency.

This would have led to a spiral of falling prices but increasing pressure to sell gilts, so, within its remit, on Wednesday 28 September, the Bank of England started temporary purchases of long-dated UK government bonds, with the aim of restoring orderly market conditions. In line with the Bank’s statutory financial stability objective, the purpose of these operations was to act as a backstop to restore orderly market conditions and reduce any risks from contagion to credit conditions for UK households and businesses while the appropriate adjustment takes place. This operation was fully indemnified by the Treasury.

It is worth remembering that the Bank’s intervention served to keep the gilt market stable so that funds had time to adjust their positions in line with the changed market conditions. The speed and scale of repricing far exceeded historical moves, and therefore fell outside the expectations of risk management plans or regulatory stress tests. Throughout the intervention, the Bank worked with LDI funds and pension schemes as they built their financial resilience ahead of it coming to an end. Market conditions have since improved. The Bank’s usage of the scheme, at under £20 billion, was significantly below the maximum size permitted under its maximum daily auction size and below the increase in the indemnity provided by the Treasury. This stress in the LDI sector highlights the necessity of ensuring that the appropriate risk oversight and mitigation systems are in place for market-based finance.

I shall try to address the question asked by the noble Baroness, Lady Bowles, and the noble Lord, Lord Tunnicliffe, about what has happened since the 2018 exercise that looked at this. Since then, the Bank of England has worked with other domestic regulators, including the Pensions Regulator and the FCA, on enhancing monitoring of the risks. That included working with the Pensions Regulator on a survey of DB pension schemes in 2019 and prompting work to improve pension liquidity risk management. As the FCA noted in its letter to the noble Lord, Lord Hollick, and my noble friend Lord Bridges in March this year, the FCA contacted the largest LDI fund managers to ask them what plans they had in place to deal with increased volatility. It also probed large managers on the speed with which they could call money from underlying pension funds in the event of stress.

In response to many noble Lords, including the noble Lords, Lord Sharkey, Lord Sikka and Lord Davies of Brixton, and the right reverend Prelate, the Government recognise that there will be lessons that need to be learned from the market volatility seen in recent weeks. The regulators are working with the industry to improve their resilience to market shocks, and it remains a focus of the Government and regulators to ensure that we have a robust regulatory system.

In addition to the ongoing monitoring of systemic risks by the FPC, His Majesty’s Treasury and UK financial regulators have been working internationally as part of the Financial Stability Board, as I previously noted, to develop global approaches to identify and address vulnerabilities in market-based finance. The noble Lord, Lord Sikka, asked why we take a different approach to the regulation of banks versus non-banks in the financial system. Part of that is the international nature of the non-banking part of our financial system.

The Bank of England has also committed to working with the Pensions Regulator and the Financial Conduct Authority to ensure that appropriate levels of resilience are in place to mitigate risks to UK financial stability. As the Pensions Regulator chief executive emphasised earlier this month, DB pension schemes were not and are not at risk of collapse due to rapid movements in the price of gilts, and savers should not make any hasty decisions about their pension pots.

I turn to pensions. As I have just stressed, defined-benefit pensions remain strong, and members of those schemes that were invested in LDI funds are not at risk of losing out as a result of either the aforementioned volatility or interventions made by the Bank. Indeed, the independent Pensions Regulator issued a statement on 12 October for trustees of defined-benefit and defined-contribution schemes and their advisers, which communicated its expectations on matters for trustees to consider in relation to managing schemes and supporting savers.

The noble Lords, Lord Sharkey, Lord Best and Lord Campbell-Savours, and my noble friend Lord Young of Cookham, rightly mentioned the housing market, and I want to respond directly. The fact is that interest and mortgage rates have been rising since last autumn in response to global trends. This is not a UK phenomenon, with the US Federal Reserve having raised its base rate since March 2022 and the ECB taking similar steps. In the UK, around 75% of residential mortgages are on a fixed rate and therefore, in the short term, shielded from rate rises. However, I know that, for those on variable rights and those who are seeing their own fixed-rate deals coming to an end in forthcoming months, there will be significant concern. Where mortgage holders fall into financial difficulty, FCA guidance requires firms to offer tailored forbearance options. While it is important to note that the pricing of mortgages is a commercial decision for lenders in which the Government do not intervene, the Government do offer support through Support for Mortgage Interest loans for those in receipt of income-related benefits and protection in court through the pre-action protocol.

Similarly, the setting of rates is a commercial decision for private landlords in which the Government do not intervene. However, we understand that many people will be worried about the impact of rising prices. My noble friend Lord Young of Cookham spoke more broadly about the reform needed in the private rented sector in order to provide more security to tenants in that sector. I agreed with much of what he had to say. Indeed, the Government’s programme of work to reform the private rented sector continues through, for example, our commitment to ban Section 21 no-fault evictions. We heard ideas from my noble friend Lord Young and the noble Lords, Lord Best and Lord Campbell-Savours, for other changes that we could potentially make in housing. I will take those back to the department and ensure that they are looked at carefully.

The noble Lord, Lord Sharkey, asked whether the local housing allowance would be uprated. He will know that, as part of our response to Covid, the rates of local housing allowance were increased significantly to the 30th percentile of the market, with 1.5 million households gaining just over £600 a year. We have maintained those rates at an elevated level last year and this year in order to ensure that claimants can continue to benefit from this. This is reviewed annually, and I will not comment further on the uprating of benefits.

More specifically, many noble Lords spoke about the difficulties that vulnerable people are facing this year with the rising cost of living. The Government absolutely recognise that and are focusing our support most heavily on those households. People are facing a difficult time. We have put in place an energy price guarantee and further support for those on income-related benefits, pensioners and those with disabilities. There is also discretionary support for local authorities to provide help in their local areas.

I am conscious of the time so I will begin to wrap up. Many noble Lords used this debate as an opportunity to look ahead to the Chancellor’s Autumn Statement. I welcomed the constructive efforts by the noble Lord, Lord Liddle, to make suggestions not just about areas of spending that should be prioritised but about ideas for tax reform to help to fund them, which always needs to come alongside. I will only say to him, on his suggestion for equalised pension tax reform, that we have heard in this Chamber in recent weeks about the challenges of keeping GPs and others in their roles because of the tax treatment of their public sector pensions, and the idea might perhaps be a bit more complicated than it may look at first sight.

[Lord Bilimoria (CB)]

My Lords—

[Baroness Penn (Con)]

I am afraid I am really short on time, so I will make some progress and finish.

As the Chancellor has said, and as I think the noble Lord, Lord Desai, and the noble Baroness, Lady Kramer, agree, stability is a pre-requisite for growth. It is vital for families across the country—from the jobs they depend on to mortgages they have to pay, and to savings for pensioners and businesses investing in the future—and vital for the Government’s ability to borrow and invest in our economy.

The Chancellor will deliver his Autumn Statement on 17 November. Many noble Lords have asked me to speculate on its contents. They will know that I cannot, but I can say at this stage that the Prime Minister and the Chancellor are clear that the priority will be to ensure economic stability by setting out a concrete plan to get debt falling in the medium term. However, they are also clear about their priorities when taking the difficult decisions that this will necessarily entail: to support the most vulnerable and to drive growth to ensure that we have a strong economy by building jobs for the future—and our resilience to future shocks, too.

Tax Cuts: Fiscal Impact

Debate between Baroness Penn and Lord Bilimoria

Wednesday 13th July 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, all I can talk about is this Government’s record, rather than speculating on the future. That is a record of repairing the public finances, protecting jobs during the pandemic through the furlough scheme, delivering cost of living support worth £37 billion this year to help people, and investing in the future in skills, infrastructure, levelling up and cutting carbon from our economy faster than any other G7 nation.

[Lord Bilimoria (CB)]

My Lords, do the Government agree that our growth is forecast to be somewhere between 0% and 1% next year and our level of business investment is the lowest in the G7? Should we not be prioritising investment that leads to growth of at least 2% a year? Should we not cut taxes rather than have the highest tax burden in 70 years, which hampers growth and investment, including inward investment?

[Baroness Penn (Con)]

My Lords, I hope the noble Lord will join me in welcoming the better than expected growth figures that we saw today, but he is right we need to continue to invest in our economy. That is why we are investing in our future skills system and more in infrastructure across the UK, and we will continue to do so to drive growth in our economy.

Inflation

Debate between Baroness Penn and Lord Bilimoria

Monday 23rd May 2022 Lords Chamber

[Baroness Penn (Con)]

The Government are putting in place support now. It is worth remembering that the household support fund is open, it is ready, it is there for people to access. It is also worth remembering that national insurance thresholds will increase in July, putting more money back into the pockets of the lowest-income households. It is also worth remembering that the rebate on people’s energy bills, worth £200, is yet to come—it will come in October. We are keeping the situation under review, we are standing ready to do more, but more action is already committed to by the Government that will flow through to people’s pockets over the coming weeks and months.

[Lord Bilimoria (CB)]

My Lords, in my role as president of the CBI, I remember asking the Chancellor in February 2021 whether he was worried about inflation. Since then, we have had galloping inflation, and businesses and consumers are suffering hugely as the noble Lord, Lord Howarth, said. Are the Government concerned that we are now entering stagflation, and should not they be doing all they can to incentivise investment for growth, for example, by reducing the highest tax burden in 71 years, by bringing back a temporary cut in VAT of 12.5% and by having a permanent 100% tax reduction on capital investment by business?

[Baroness Penn (Con)]

My Lords, I absolutely agree with the noble Lord on supporting investment and putting our efforts towards growing the economy. He will know that we have cut business rates by 50% for eligible retail, hospitality and leisure businesses this year. We have increased the employment allowance from £4,000 to £5,000, cutting the cost of employment for 495,000 small businesses, and we have increased the annual investment allowance to £1 million. I know that there is more to do, but I agree with the sentiment in terms of increasing investment in our economy.

Finance (No. 2) Bill

Debate between Baroness Penn and Lord Bilimoria

Lords Hansard - Part 2 & 2nd reading & Committee negatived & 3rd reading
Tuesday 22nd February 2022 Lords Chamber

[Baroness Penn (Con)]

My Lords, I thank all noble Lords for their contributions to this debate. In closing, I will focus on responding as far as possible to the many and varied points raised.

The noble Lord, Lord Sikka, asked about the different tax treatment of earned and unearned income. The measure in the Bill increasing dividend tax rates by 1.25 percentage points for all bands is precisely to ensure that those with dividend income contribute to the health and social care spending settlement, as well as those with earned income. This measure supports the Government’s objective of raising revenue to fund our national priorities while also helping to limit the incentive for individuals to work through an incorporated company and remunerate themselves via dividends rather than wages to reduce their tax bill. I also point out that dividend income is paid out of corporate profits, which are usually also subject to corporation tax.

The noble Lord also raised various tax reliefs, specifically for video games, films and TV. They are available only to productions that pass the British cultural test. The production is considered against a range of criteria—not just where it is set but where it is made, and the nationality of the personnel involved in making it. The Government recognise the valuable economic and cultural contribution of the video games industry and other cultural industries. The video games tax relief has supported £4.4 billion of UK expenditure on 1,640 games since its introduction in 2014. I reassure the noble Lord that HMRC keeps these reliefs under review. An external evaluation of the video games tax relief was published in 2017, and a review of the film and TV reliefs is currently under way.

I also noted the request by the noble Lord, Lord Sikka, for information about tax reliefs to be set out at each Budget. I will take his suggestions back to the Treasury. He also asked how the global minimum tax rate will be assessed. The UK is proud that, in October 2021, more than 130 countries signed up to a new global minimum tax framework that built on a deal brokered in principle by the G7 during the UK’s presidency of that grouping. The OECD has published the model rules for pillar 2, which will help to ensure that multinational groups pay a minimum level of tax in each jurisdiction in which they operate, and the UK Government have now published a consultation on how those rules will be implemented in UK domestic legislation.

The noble Lord, Lord Razzall, asked about the timing of the health and social care levy, given pressures on household budgets, and the noble Lord, Lord Bilimoria, spoke more generally about the impact of high tax burden in the UK. I would say to noble Lords that the Government are committed to responsible management of public finances, and the plan for health and social care will lead to a permanent increase in spending. It is important, therefore, that that spending is fully funded, particularly in the context of record borrowing and debt to fund the economic response to Covid.

The health and social care levy will allow the Government to implement necessary adult social care reform, tackle the elective backlog in the NHS as it recovers from coronavirus, develop our pandemic response and preparedness, and ensure that the NHS has the resources it needs through this Parliament. These are things I hear noble Lords call for time and again in debates in this House, and the decision to implement the health and social care levy is the mechanism that means we can afford to do them. I would also point out that the highest earning 15% will pay over half the revenues, and 6.1 million people earning less than the primary threshold and lower profits limit will not pay the levy. The levy also applies to businesses; as those businesses benefit from having a healthy workforce, it is only fair that they contribute.

On the more general point made by the noble Lord, Lord Bilimoria, the fact is that the Government remain committed to fiscal responsibility and funding excellent public services. It is vital not just to borrow to fund those services but to fund them fairly, with both businesses and individuals contributing. That is why the Government have had to make difficult choices, but those choices mean we are now bringing debt under control and investing in public services.

The noble Lord, Lord Bilimoria, and the noble Baroness, Lady Kramer, raised the question of economic growth. I would say to noble Lords that this Government are absolutely seized of the need to drive up productivity, which is why there is such a focus on investment in recent budgets and in the measures in this Finance Bill.

The noble Lord, Lord Razzall, also asked about universal credit. The Government have reduced the universal credit taper rate from 63% to 55% and increased universal credit work allowances by £500 per annum to make work pay. This is essentially a tax cut for the lowest paid in society, worth around £2.2 billion in 2022-23. The change also means that 1.9 million households will, on average, keep an extra £1,000 on an annual basis. That will be combined with the national living wage increase of 6.6% to £9.50 per hour in April 2022 for those aged 23 and over, which will benefit over 2 million workers. Since its introduction in 2016, the national living wage has increased the pre-tax earnings of a full-time worker by over £5,000 a year. That increase is consistent with the Government’s target to go even further and raise the national living wage to two-thirds of median earnings for over-21s by 2024, provided economic conditions allow. That is an ambition to abolish low pay in this country altogether, which I hope will be welcomed across this House.

The noble Baroness, Lady Bennett, the noble Lord, Lord Tunnicliffe, and others raised the issue of the windfall tax. The noble Lord, Lord Razzall, and others also asked whether our approach to support households with the cost of their energy bills is the right one. I do not want to go over all the ground we covered in Oral Questions earlier today, but I would say to noble Lords that the UK Government do place additional taxes on the extraction of oil and gas. Indeed, the headline tax rate charged on the profits from UK oil and gas production at 40% is currently more than double that charged on company profits in most other areas of the economy. To date, the sector has paid more than £375 billion in production taxes.

Noble Lords expressed scepticism about ensuring that there is adequate investment in this sector to secure ongoing energy security and the feed-through that that will have on people’s household bills. In 2020-21, investment in the sector was at an all-time low; that is part of the context in which we need to think about the arguments for a windfall tax on those producers. An abrupt tax change would create uncertainty and potentially deter significant investment opportunities.

As I said earlier, the Government have set out a significant programme of support for households with their energy bills, worth more than £9 billion. I must disagree with the characterisation of the noble Lord, Lord Tunnicliffe, of that support as “buy now, pay later”. A large part of that support is a £150 rebate on council tax bills for all homes in bands A to D. This is a more targeted approach than the VAT cut proposed by the Benches opposite; it also gets support to households faster because the rebate will be available from April, whereas a VAT cut would be spread across the course of the next year.

The noble Lords, Lord Butler and Lord Tunnicliffe, and the noble Baroness, Lady Kramer, touched on the work of the sub-committee that is looking at the Bill. I thank it for its incredibly detailed work. It is an incredibly important part of the system that we have and the contribution that this House makes to these processes, even though we do not amend or vote on Finance Bills. Speaking from the Treasury’s point of view, I know that that work is taken incredibly seriously, is looked at in detail and provides a contribution to the process.

The Treasury’s assessment is that basis period reform creates an ongoing administrative burden saving of £1.1 million a year for business, but the Government are planning further engagement to explore whether and how to introduce easements to reduce possible associated administrative burdens. In agreement with the committee’s recommendation, the Government will reassess the administrative burdens and savings of basis period reform in the course of exploring these options for easements. The Government have delayed basis period reform in response to consultation feedback, giving businesses and accountants more time to prepare. The transition to the new tax year basis needs to take place before Making Tax Digital is introduced, to avoid hard-coding complexity into the new Making Tax Digital systems.

Noble Lords also asked about HMRC’s resources for the Making Tax Digital income tax self-assessment. The spending review process between HM Treasury and HMRC considers demands on the department, including on both customer service and policy development, to arrive at an agreed spending settlement that ensures that HMRC has sufficient resources and capacity to deliver its commitments and service levels. HMRC is confident that it has the resources it needs.

Many noble Lords raised the Government’s efforts to tackle economic crime. Indeed, we heard some discussion of that in the Statement repeat we just had. The Government are absolutely clear that we will not tolerate criminals profiting from dirty money, and that we will do whatever is necessary to bring such criminals to justice. The economic crime plan of three years ago was a landmark piece of work that brought together government, law enforcement and the private sector in close co-operation. I will not repeat all the measures that we have taken under that plan, but we have undertaken around 7,900 investigations, 2,000 prosecutions and 1,400 convictions annually for stand-alone money laundering or cases where money laundering is the principal offence. We have restrained £1.3 billion and recovered £1 billion since 2014 using the Proceeds of Crime Act, civil recovery and agency-specific disgorgement mechanisms.

The Government are bringing forward significant investment to tackle these crimes, including through, in this Bill, legislating for the economic crime anti-money laundering levy. I reiterate to noble Lords the Government’s commitment to reforming Companies House and the register of overseas entities’ beneficial ownership. As we heard from the Prime Minister earlier this month, the Government are committed to bringing forward an economic crime Bill to deliver those reforms.

The noble Baroness, Lady Kramer, and the noble Lord, Lord Tunnicliffe, raised the issue of the bank surcharge and, in particular, pointed out the support that the Government provided to business during the pandemic through bounce-back loans, CBILS and so on. That is exactly why we are asking business to contribute to the costs of the recovery. The combination of the corporation tax increase and the new bank surcharge rate means that banks will have a higher rate of tax under the new regime than currently.

The noble Lord, Lord Tunnicliffe, asked a specific question about the Commons Public Accounts Committee’s claim that HMRC has effectively written off £4 billion of fraud and what the Treasury’s assessment of that is. We do not recognise any claims that we have written off any money. We definitively have not and do not intend to do so. Over the course of this financial year and the next, HMRC expects to recover another £800 million to £1 billion of overclaimed grants on top of the £500 million already recovered to date. Beyond that, we are not giving up on this. We continue to seek to recover everything we can. These overclaimed grants result from error as well as fraud and, where individuals have made genuine mistakes, HMRC will help them to put things right.

The Finance Bill comes before us in a significantly improved economic situation. The Government are rightly focused on economic recovery. In 2020, this country experienced the deepest recession on record, but thanks to the actions this Government have taken, including the vaccination programme, we have recovered fast.

[Lord Bilimoria (CB)]

I thank the noble Baroness for giving way and appreciate her efforts to answer many of the questions I raised in my speech. I would be grateful if I could have a written response to the ones she was not able to answer. In particular, I specifically asked about the £2 billion that the Government say they spent on testing in January. They are withdrawing lateral flow testing from 1 April, which will be an additional burden on consumers and businesses. I asked for the breakdown of that £2 billion between PCR tests and lateral flow tests. I was attacked in the Chamber earlier for saying that £2 billion is a lot of money, but it could be a small proportion of that. If the noble Baroness could give the figures, it would clarify the situation for the House, the public and business.

[Baroness Penn (Con)]

I always admire the noble Lord’s ability to cram in the most questions or points in his contributions to these debates. I make an effort to address as many as I can—this one strayed slightly beyond the brief I had on the Bill, but I undertake to take that question back and provide a written answer if I can.

I was nearly the conclusion of my response. We are focused on recovery from the recession that we experienced. I spoke about the vaccination programme and the tribute we should pay to its role in our recovery. However, we still have historically high levels of debt. New fiscal rules will help to ensure that the public finances remain on a sustainable path despite this, a sustainable path that this Bill also helps to chart. It is a Bill that supports our businesses and our economy as we recover from the pandemic. It supports stronger public finances through these exceptional times. It helps to tackle tax avoidance and evasion and contributes to a simpler and more sustainable tax system. For these reasons, I commend it to the House.

Windfall Tax: Oil, Gas and Energy Companies

Debate between Baroness Penn and Lord Bilimoria

Tuesday 22nd February 2022 Lords Chamber

[Baroness Penn (Con)]

My noble friend is right. The North Sea transition deal is a global exemplar of how the Government can work in partnership with the offshore oil and gas industry to achieve a managed energy transition.

[Lord Bilimoria (CB)]

My Lords, like the noble Lord, Lord Naseby, and as president of the CBI, we feel that a windfall tax is not efficient, as it puts investments at risk for companies that are key to our transition to net zero. Does the Government agree? Secondly, do they agree that this is absolutely the wrong time for our tax burden to be at its highest level for 70 years? Businesses have suffered so much through the pandemic; will this not stifle what is already a fragile recovery?

[Baroness Penn (Con)]

My Lords, the Government agree that an abrupt tax change could put investment in this sector at risk. While the overall tax burden is high, we have had to take certain decisions to aid our recovery from the pandemic. We saw the Government put in place so much support during the pandemic, but we need to recover, for example by getting on top of NHS waiting lists.

New Businesses: Capital Gains Tax

Debate between Baroness Penn and Lord Bilimoria

Wednesday 20th January 2021 Lords Chamber

[Baroness Penn (Con)]

My Lords, as I said, the Government recently changed the regime for business asset disposal relief, but I reassure my noble friend that the change has kept the relief focused on small business owners and that over 80% of those using the relief were unaffected. On his second point, carried interest is a share of the profits made by a financial fund which is treated as capital gains; the Government have no plans to change rules around carried interest, but we keep all tax policy under review.

[Lord Bilimoria (CB) [V]]

My Lords, our tax system needs to support a competitive and dynamic economy. Businesses have suffered hugely during the pandemic. Does the noble Baroness agree that now is not the time to talk about raising taxes via capital gains tax or corporation tax? Does she also agree that raising taxes will stifle our recovery from the pandemic and hamper business investment and inward investment into the country, making our economy and businesses less competitive? We need to encourage entrepreneurship and investment into businesses; that will create the jobs that pay the taxes, which will increase our tax take.

[Baroness Penn (Con)]

I absolutely agree with the noble Lord’s sentiment about the importance of entrepreneurs and businesses to the country’s recovery. As I said to my noble friend earlier, the Government always consider the need to balance raising revenue with the principles of fairness and market efficiency. However, I cannot deny that, in future years, we will have some difficult decisions to take on balancing the books and recovering from the pandemic.

Coronavirus Job Retention Scheme: BAME Communities

Debate between Baroness Penn and Lord Bilimoria

Monday 12th October 2020 Lords Chamber

[Baroness Penn (Con)]

My Lords, of course the Government want to move forward from that approach. That is why we have invested so much in the development of vaccines and why we are working on improving test and trace. The reality is that there are health costs to lockdowns as well as economic costs, but at the same time there are economic costs if we do not get the virus under control. People do not have the confidence to go out and participate in our economy. We are seeking to find the right balance between those, at all times, in our response.

[Lord Bilimoria (CB) [V]]

My Lords, the ethnic-minority groups fared much worse as a result of the 2008 recession than the white majority, exacerbating pre-existing inequalities, with higher unemployment, lower earnings, lower self-employment rates and higher housing costs. The consequences were far-reaching and long-lasting. Can the Minister inform us about the Public Health England report in June which found that the highest coronavirus diagnosis rates were among people from black and Asian ethnic groups, who are twice as likely to die from Covid-19 than white people? More than a month after PHE’s first report and outcomes, the Government have announced research funding for projects. Can the Minister tell us the progress and findings of these projects to explain the situation? Does she also agree that mass testing would greatly help the situation?

[Baroness Penn (Con)]

I agree with the noble Lord, who has raised the question of mass testing a number of times in this Chamber. The Government are working as hard as they can to make progress. As for the report by Public Health England, there was follow-up work to be done—that is still being done, but it did not stop up from taking action immediately. For example, all health trusts were asked to undertake the risk assessments that I referred to earlier, and to put in place steps and processes to mitigate the risk to staff in those trusts, which was identified as one of the factors that could cause higher mortality rates among those communities.

Health Protection (Coronavirus, Collection of Contact Details etc and Related Requirements) Regulations 2020

Debate between Baroness Penn and Lord Bilimoria

Wednesday 7th October 2020 Lords Chamber

[Lord Bilimoria (CB) [V]]

These regulations impose a number of obligations on relevant persons in order to protect against the risks arising from coronavirus. Businesses and other public settings where people meet socially, including hospitality, close contact and leisure venues, must record contact details of customers, visitors and staff on their premises to tackle the spread of coronavirus. The details must be stored for 21 days and shared with NHS Test and Trace if requested.

All that makes sense, but Jeremy Hunt, the former Health Secretary, recently questioned the current Health Secretary, Matt Hancock, on whether the entire system of testing needed to be overhauled. He argued that the underlying problem was that the Lighthouse laboratories—the Government-funded facilities there to supplement existing public laboratories—had been “overwhelmed by demand”. As the chancellor of the University of Birmingham, I say that we have a testing facility on site and one of the top medical schools in the country. And yet, I am told, there is a piece of machinery that NHS Test has—there are about six of them—which, if we were to get hold of one of them, would enable the testing at the university facility to go up multifold. Why is that being held back? Why are these pieces of equipment not being released to increase capacity? This is an urgent situation.

At the same time, business resilience—I say as president of the CBI—is lower than it has ever been, with cash and stockpiles run down. We must get this right. We know that business knows public health must come first, and we have been doing all we can to keep staff and customers safe, whether in pubs, shops, factories or offices. Local restrictions come as a disappointment for many businesses across the country, but the Government cannot stand by as infection rates rise in the region. We must aim for a no-surprises approach as far as possible when restrictions are put in place, and not all restrictions are one-size-fits-all. We have seen this from the full lockdown in Leicester and the household-based restrictions in Greater Manchester, west Yorkshire and elsewhere.

Then we have the 10 pm closing of pubs, bars and restaurants. I declare my interests, but will the Government tell us where the evidence is that this is required? The scientific evidence I have heard is that less than 5% of new infections come from the hospitality industry, which employs 4 million people and which has really suffered—it was closed for three and a half months, from 23 March to 4 July. From my knowledge in the trade, only 10% of drinking happens after 10 pm. So why do this—quite apart from the unintended consequence of people spilling on to the streets and going elsewhere to drink?

When it comes to testing capacity, Professor William Hanage, of the TH Chan School of Public Health at Harvard University, has said, on the lack of mass testing:

“By the time you become aware of the problem it is likely to already be much larger. You are not going to detect outbreaks if you don’t look for them.”


He called for

“very good diagnostic tests as well as tests that may be less sensitive but can be used more frequently.”

Why are the Government not procuring the mass testing that is available?

The Abbott Laboratories BinaxNOW test, which is $5 and gives results in less than 15 minutes, has been approved by the FDA, but I believe has been rejected by our Government. I am told that Greece—a country that has dealt with the pandemic relatively very well—has ordered millions of these tests. If it is good enough for the FDA, and if it is good enough for Greece, which had a death rate of 36 per million vs our 663 per million, why is it not good enough for us? They are producing 50 million of these, and there are other equivalent tests that give these instant results and are affordable.

When it comes to false positives, anyone who has tested positive with these instant tests can immediately have a PCR laboratory test to confirm that it is positive. So surely, by not doing this, by not having the mass testing, we are saying that the best is being the enemy of the good. This mass testing will enable our economy to fire on all cylinders. From a cost-benefit point of view, we are talking about a £2 billion a month cost if you test everyone twice a week in the whole population. We have been spending hundreds of billions supporting the economy. If we have mass testing, our country can get on.

So, a vaccine is on soon and the testing is needed urgently—

[Baroness Penn (Con)]

My Lords, I must remind the noble Lord—

[Lord Bilimoria (CB) [V]]

Thank you very much, I am just about to stop. I would like to conclude by saying we need this testing urgently now.

Areas with Additional Public Health Restrictions: Economic Support

Debate between Baroness Penn and Lord Bilimoria

Wednesday 7th October 2020 Lords Chamber

[Baroness Penn (Con)]

My Lords, we are putting in place a huge amount of support to businesses affected by the regulations to contain coronavirus. I referred to the support for businesses that may be forced to close by local lockdowns. Of course, there is also the bounce-back loan scheme that has provided billions of pounds of support, and we have extended both the application period and the repayment period for that scheme to up to 10 years. This will halve monthly payments, which do not even come in in the first year—the Government are covering those.

[Lord Bilimoria (CB) [V]]

My Lords, a second national lockdown will be devastating for our economy, so it is right to prioritise bringing infections under control. Local lockdowns are a crucial piece in the puzzle of managing the risk of infection and reopening the economy, so we must get good at them. Does the noble Baroness agree that all restrictions must be based on clear, transparent evidence, that rapid mass testing must be turbo-charged—where are we with that?—alongside test and trace, and that further support should be considered for those sectors worst hit by lockdown measures? Does she agree that, with local lockdowns becoming more prevalent, we should have a tiered or graded approach to local lockdowns to make it easier for firms and individuals to know the rules, as well as what sort of support to expect? Moving from grade 1 to grade 2 or grade 3 lockdowns should trigger escalating levels of support. It is important that the support is available to business in lockstep with any tightening of restrictions.

[Baroness Penn (Con)]

My Lords, the decisions made on local lockdowns reflect the situation in the local area and, wherever possible, are made in agreement with local leaders. We are working each week to increase the capacity of our testing system so that it can support track and trace. Those areas affected by local lockdowns can access more money to support those who may need to self-isolate or businesses that need to close, and more money to support local test and trace measures to get the infections under control.

Performing Arts: Job Support Scheme

Debate between Baroness Penn and Lord Bilimoria

Tuesday 29th September 2020 Lords Chamber

[Baroness Penn (Con)]

My Lords, the business rates holiday applies for the year 2020-21. The Government will in future keep under review all the policies that they have put in place to support businesses and arts organisations.

[Lord Bilimoria (CB) [V]]

My Lords, the winter economic plan, including the Job Support Scheme, is bold and will, I hope, save hundreds of thousands of viable jobs this winter. However, will the Government acknowledge that the Chancellor’s announcements will not help everyone, especially when the medium-term outlook for some sectors, such as hospitality and the creative industries, looks so uncertain? Do they agree that further business support for these sectors might be required, including in relation to business rates? Do they also agree that there is a huge requirement to provide people with the skills that they need for the jobs of the future?

[Baroness Penn (Con)]

My Lords, the Government have recognised the specific pressure that certain sectors are under, and extending the 5% VAT cut until the end of March is one measure that they have taken. We also recognise that not every job will be saved, and that is why we have invested £2 billion in the Kickstart jobs scheme for young people. I believe that my right honourable friend the Prime Minister is making further announcements on skills training today.